Retirement Contribution Effects on Your Paycheck

An employer sponsored retirement savings account could be one of your best tools for creating a secure retirement. It provides two important advantages. First, all contributions and earnings are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your account, which can range from 0% to 100% of your contributions. Use this calculator to see how increasing your contributions to a 401(k), 403(b) or 457 plan can affect your paycheck as well as your retirement savings. This calculator uses the 2014 withholding schedules, rules and rates (IRS Publication 15).

Retirement Contribution Effects on Your Paycheck

Saving an extra PAYCHECK_DIFFERENCE per paycheck could produce DOLLARS_DIFFERENCE at retirement. This was calculated by comparing the results of contributing RETIRE_PLAN_PERCENT1 to your retirement plan vs. RETIRE_PLAN_PERCENT2 to your retirement plan over the next YEARS years. To receive your employer's maximum match of EMPLOYER_DOLLARS, you should contribute at least EMPLOYER_CALC_MAX of your annual salary. **GRAPH** **GRAPH**
  Contribute RETIRE_PLAN_PERCENT1 Contribute RETIRE_PLAN_PERCENT2
Plan type PLAN_TYPE PLAN_TYPE
Current balance STARTING_AMOUNT STARTING_AMOUNT
Years to invest YEARS YEARS
Annual rate of return RATE_OF_RETURN RATE_OF_RETURN
Annual salary ANNUAL_SALARY ANNUAL_SALARY
Expected annual salary change SALARY_INCREASE SALARY_INCREASE
Your contribution* CONTRIBUTE_ANNUAL per year CONTRIBUTE_ANNUAL2 per year
Your employer's match EMPLOYER_ANNUAL per year
MSG_EMPLOYER_MATCH_DESC
EMPLOYER_ANNUAL2 per year
MSG_EMPLOYER_MATCH_DESC
Total you will contribute TOTAL_AMOUNT_YOU_HAVE_PAID_IN TOTAL_AMOUNT_YOU_HAVE_PAID_IN2
Total your employer will contribute TOTAL_AMOUNT_EMPLOYER_PAID_IN TOTAL_AMOUNT_EMPLOYER_PAID_IN2
Total at age AGE_OF_RETIREMENT TOTAL_AT_END_OF_INVESTMENTTOTAL_AT_END_OF_INVESTMENT2

*The annual maximum for 2014 is $17,500. Employees 50 or over can deposit an additional $5,500 "catch-up" contribution into their account. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. The maximum contributions and "catch-up" provisions are automatically included in your results. If you have entered an expected salary change, this is the total for the first year only, your annual total will change as your salary increases or decreases.

Paycheck Withholding Summary
 Contribute RETIRE_PLAN_PERCENT1Contribute RETIRE_PLAN_PERCENT2Difference
Pay period:PAY_LABELPAY_LABEL 
Filing status:FILING_STATUSFILING_STATUS 
Year to date income:YEAR_TODATE_EARNINGSYEAR_TODATE_EARNINGS 
Gross pay per period:GROSS_EARNINGS1GROSS_EARNINGS2GROSS_EARNINGS3
Projected annual income:ANNUAL_INCOME1ANNUAL_INCOME2ANNUAL_INCOME3
Number of allowances:WITHHOLD_COUNT1WITHHOLD_COUNT2WITHHOLD_COUNT3
DD_CATAGORY1DD_CURRENT1DD_PROPOSED1DD_DIFFERENCE1
DD_CATAGORY2DD_CURRENT2DD_PROPOSED2DD_DIFFERENCE2
DD_CATAGORY3DD_CURRENT3DD_PROPOSED3DD_DIFFERENCE3
DD_CATAGORY4DD_CURRENT4DD_PROPOSED4DD_DIFFERENCE4
DD_CATAGORY5DD_CURRENT5DD_PROPOSED5DD_DIFFERENCE5
DD_CATAGORY6DD_CURRENT6DD_PROPOSED6DD_DIFFERENCE6
DD_CATAGORY7DD_CURRENT7DD_PROPOSED7DD_DIFFERENCE7
DD_CATAGORY9DD_CURRENT9
(RETIRE_PLAN_PERCENT1 of income, this may be limited by 2014 annual limits)
DD_PROPOSED9
(RETIRE_PLAN_PERCENT2 of income, this may be limited by 2014 annual limits )
DD_DIFFERENCE9
Total deductionsTOTAL_DEDUCTIONS1TOTAL_DEDUCTIONS2TOTAL_DEDUCTIONS3
DD_CATAGORY8DD_CURRENT8DD_PROPOSED8DD_DIFFERENCE8
*Source: http://www.irs.gov Publication 15 Income Tax Withholding Tables for 2014

Account Balance by Year

**REPEATING GROUP**

Retirement Contribution Effects on Your Paycheck Definitions

Retirement savings current
This is the percentage of your annual salary you contribute to your retirement plan each year. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 75% to account for FICA (Social Security and Medicare) taxes.
Retirement savings new
This is the new percentage of your annual salary would like to compare your current contributions too. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 75% to account for FICA (Social Security and Medicare) taxes.
Gross pay
This is your gross pay, before any deductions, for the pay period. Please enter a dollar amount from $1 to $1,000,000.
Pay period
This is how often you are paid. Your selections are: Weekly (52 paychecks per year), Every other week (26 paychecks per year), Twice a month (24 paychecks per year), and Monthly (12 paychecks per year).
Filing status
This is your income tax filing status. The choices are 'Single' and 'Married'. Choose 'Married' if you are married or file as 'head of household'. Choose 'Single' if you file your taxes as a single person or if you are married but file separately.
Number of allowances
When your Federal income tax withholdings are calculated, you are allowed to claim allowances to reduce the amount of the Federal income tax withholding. In 2014, each allowance you claim is equal to $3,950 of income that you expect to have in deductions when you file your annual tax return. The number of allowances you should claim depends largely on the number of dependents you have and your itemized deductions. This calculator allows from 0 to 99 allowances.
State and local taxes
This is the percentage that will be deducted for state and local taxes. We take your gross pay, minus $3,950 per allowance, times this percentage to calculate your estimated state and local taxes. Please note, this calculator can only estimate your state and local withholdings.
Pre-tax deductions
Enter any payroll deductions made by your employer that are made with pre-tax income. This might include your health insurance, life insurance among other pre-tax deductions.
Post-tax deductions
Enter any payroll deductions made by your employer that are made with after-tax income.
Post-tax reimbursements
Enter any reimbursements made by your employer that are after-tax.
Expected annual salary change
The expected annual increase in your salary. We use this to project future contributions and matches to your savings plan.
Year to date income
Income from your employer that you have been paid during the current year, before the current payroll period. We use this amount to determine if you are still required to pay FICA OASDI for the current payroll period.
Social Security tax
For 2014, Social Security tax is calculated as your gross earnings times 6.2%. For 2014, incomes over $117,000 that have already had the maximum Social Security tax of $7,254 withheld will not have additional withholdings. Please note that if you have other wages or employers this calculator does not make any assumptions as to the total Social Security tax withheld for the current year other than the actual inputs for this calculator. This tax is also referred to as the Federal Insurance Contributions Act Old Age Survivors and Disability Insurance (FICA OASDI).
Medicare tax
Medicare tax is calculated as your gross earnings times 1.45%. Unlike the Social Security tax, there is no annual limit to the Medicare tax. Starting in 2013, an additional Medicare tax of 0.9% is withheld on all gross earnings paid in excess of $200,000 in a calendar year. If you enter an amount for the year-to-date gross earnings, this additional Medicare tax will be calculated based on the current period's gross earnings that exceed the annual $200,000 threshold. If no year-to-date amount is entered, any additional Medicare tax withholding will be calculated only for any gross earnings in excess of $200,000 for the current payroll period. If year-to-date wages prior to the current payroll period have exceeded $200,000, the year-to-date wages must be entered to calculate an accurate additional Medicare tax.
Federal tax withholding calculations
Federal income tax withholdings were calculated by:
  1. Multiplying taxable gross wages by the number of pay periods per year to compute your annual wage.
  2. Subtracting the value of allowances allowed (for 2014, this is $3,950 multiplied by withholding allowances claimed).
  3. Determining your annual tax by using the tables below (single and married rates, respectively).
  4. Dividing the amount of tax by the number of pay periods per year to arrive at the amount of federal withholding tax to be deducted per pay period.
Single Withholding Rates 2014*
Annual taxable income between these amountsAnnual withholdingWithhold additional % of income over this amount
$0.00 - $2,250.00$0.00 
$2,250.00 - $11,325.00$0.00plus 10% of income over $2,250.00
$11,325.00 - $39,150.00$907.50plus 15% of income over $11,325.00
$39,150.00 - $91,600.00$5,081.25plus 25% of income over $39,150.00
$91,600.00 - $188,600.00$18,193.75plus 28% of income over $91,600.00
$188,600.00 - $407,350.00$45,353.75plus 33% of income over $188,600.00
$407,350.00 - $409,000.00$117,541.25plus 35% of income over $407,350.00
$409,000.00 - (no limit)$118,118.75plus 39.60% of income over $409,000.00
*Source: http://www.irs.gov Publication 15 Income Tax Withholding Tables for 2014
Married Withholding Rates 2014*
Annual taxable income between these amountsAnnual withholdingWithhold additional % of income over this amount
$0.00 - $8,450.00$0.00 
$8,450.00 - $26,600.00$0.00plus 10% of income over $8,450.00
$26,600.00 - $82,250.00$1,815.00plus 15% of income over $26,600.00
$82,250.00 - $157,300.00$10,162.50plus 25% of income over $82,250.00
$157,300.00 - $235,300.00$28,925.00plus 28% of income over $157,300.00
$235,300.00 - $413,550.00$50,765.00plus 33% of income over $235,300.00
$413,550.00 - $466,050.00$109,587.50plus 35% of income over $413,550.00
$466,050.00 - (no limit)$127,962.50plus 39.60% of income over $466,050.00
*Source: Source: http://www.irs.gov Publication 15 Income Tax Withholding Tables for 2014
Plan type
Choose the type of plan your employer sponsors. The choices are 401(k), 403(b) or 457. Each choice includes an option for pre-tax ("traditional" contributions) and after tax ("Roth" contributions). Except for the differences between a pre-tax contribution and an after tax contribution, your plan type will not affect the calculations, it is only used to label the generated results.
Current balance
The current balance of your retirement plan.
Current age
Your current age.
Age of retirement
Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions. So if you retire at age 65, your last contribution occurs when you are actually 64.
Annual contribution limits
Your total contribution for one year is based on your annual salary times the percent you contribute. However, your annual contribution is also subject to certain maximum total contributions per year. The annual maximum for 2014 is $17,500. If you are age 50 or over, a 'catch-up' provision allows you to contribute additional $5,500 into your account. It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. The catch-up amount is indexed for inflation in increments of $500.

It is important to note that some employees are subject to another form of contribution limitations. Employees classified as 'Highly Compensated' may be subject to contribution limits based on their employer's overall participation. If you expect your salary to be $115,000 or more in 2014 or was $115,000 or more in 2013, you may need to contact your employer to see if these additional contribution limits apply to you.

Employer match
An employer match is in addition to your annual contributions. It is based on a percentage of your annual contributions. This range can be anywhere from 0% to 100%.

For example, let's assume the employer matches 50% of the employee's contributions up to 6% of their salary. The employee earns $100,000 per year and contributes 10%. The results would be:

  • $10,000 from the employee
  • $3,000 from the employer (which is 50% of $6,000 or 6% of the annual salary)
  • Total: $13,000

Please read the definition for 'Employer maximum' for a detailed description of maximum employer matching contributions. It is also important to note employer contributions do not affect the maximum amount allowed to be contributed by an employee. Matching contributions can be subject to a vesting schedule. See your plan information for details.

Employer maximum
This is the maximum percent of your salary matched by your employer regardless of the amount you decide to contribute. For example, let's assume your employer has a 50% match, up to a maximum of 6% of your annual salary. If you have an annual salary of $25,000 and contribute 6%, your annual contribution is $1,500. With a 50% match, your employer will add another $750 to your 401(k) account. If you increase your contribution to 10%, your annual contribution is $2,500 per year. Your employer match, however, is limited to the first 6% of your salary and remains at $750.


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